How to Delay Taking Social Security Benefits Until You Absolutely Have To

I recently heard about a man who was retired longer than he worked, retiring at 52 and living well into his 90’s. There’s a life worth living.

And it’s not that far-fetched. Life expectancies continue to inch upward, particularly for those who make it to retirement. For those who reach age 65, life expectancy stretches to 82 for men and 85 for women. For married couples who reach 65 together, the news is even better. Odds are 45% that at least one of the partners will live to 90, giving them a full 25 years of traditional “retirement” time.

How Will They Pay for That?

Reminder: This is a good problem to have — far better than the alternative. It’s important to have a long-lasting plan for the golden years so you can enjoy them as long as possible.

Like everything else that has to do with money, time can be your friend or your enemy. It’s critical to start thinking about life in your 70s, 80s and 90s as soon as possible. Yes, that means doing so in your 50s and 60s, and perhaps even earlier. You likely don’t want to get to your golden years and rack up a lot of credit card debt to pay for the essentials.

Factoring in Social Security

For many, the most crucial variable in this equation revolves around when to start collecting Social Security benefits. The simple answer is to take it as late as possible, which is currently at age 70, though every individual situation is different. The earliest you can make this decision is at age 62, so you can plan accordingly, which begins with giving yourself options by planning years before retirement arrives.

Americans who paid into Social Security can begin receiving benefits as early as age 62 — before the traditional 65-year-old retirement age — but that comes at a price. Younger recipients receive smaller benefits to account for the added years of payout. On the other hand, recipients can chose to postpone benefits until age 70, which results in a “bonus” that lasts the remainder of the person’s life. The difference is dramatic — an extra 8% per year for those who wait past retirement age. An example from the Social Security administration shows that a recipient who takes payments as early as possible and deserves $1,000 per month at retirement would instead receive $750. If that same person waited until 70, they would get a monthly check of $1,320.

If you opt to wait to collect Social Security, you’ll be expected to use your own money, which can come from a combination of private retirement savings and continued income. Because it’s to your benefit to preserve your retirement savings as long as possible, continuing to earn income through your 60’s is an optimal option.

Older Americans in the Workforce

In many ways, things are getting harder for older workers. Studies (like this one) show older workers have a harder time even getting through the door for job interviews as many employers are hiring those from younger generations because they’re less-expensive and have more experience with technology. Plus, when layoffs and buyouts roll around, more expensive (often older employees who have spent many years with the company) are typically targeted.

But there are bright spots in the digital economy that can help older workers keep the money coming in as they work to reach the 70-year-old finish line — particularly in the sharing economy.

Whatever you call it — part-time work, contingent work, gig economy work — some only-in-the-digital age income streams are ideal for older workers who need some income but don’t want to be tied down to a full-time job. Some of these positions are challenging for those who need to support a family, like driving for companies like Uber or selling homemade crafts on sites like Etsy. But these can be ideal roles for folks who are simply looking for supplemental income. For example, Uber announced a partnership with AARP last year, hoping to recruit senior drivers.

What’s more, the sharing economy also creates new ways to earn income from assets you’ve acquired. It’s easier than ever to turn your summer cabin into a part-time vacation rental, for example, thanks to services like Airbnb. One extreme, but potentially lucrative, step is to downsize to a smaller home in a less expensive area while renting out a paid-off home in an pricey neighborhood for a few years. Newer sharing economy services even let people rent out their cars or other personal items.

Many older workers may fail to realize the value of their accumulated knowledge. In the past, some made small consulting agencies and, while that’s still an option, the proliferation of online course tools now make it relatively easy to teach digital classes in everything from cooking to coding that consumers can (and do) pay for. Many folks are learning how to turn their hobbies into small-time entrepreneurial adventures this way. For example, Angela Fehr, a self-taught artist in Vancouver, Canada, offers classes in watercolor painting and they range in price from free to $99.

The key to this is nurturing hobbies, and the entrepreneurial skills needed to monetize them, before staring at a big income hole in your early 60s. Play around with online course software, ask questions and pay attention to other sharing economy developments.

Taken collectively, I call all these revenue-generating opportunities “21st-Century moonlighting.” It’s not for everyone, of course. Plenty of folks are busy enough trying to hang onto their full-time jobs in competitive environments. But mastering the “gig economy” and supplementing a full-time income may make it easier to postpone reliance on Social Security. And maybe even avoiding any boredom that sometimes comes with retirement, too.

Deciding when to start receiving Social Security is a personal and complex subject, made even more complicated when a partner’s benefits are part of the decision. It should be made carefully, possibly even with the advisement of an expert. To start, you can read this article to see if you are financially ready for retirement or use online tools to get an idea of when it makes sense to start receiving benefits before age 70.